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On Tuesday, UBS began coverage on Ambu A/S (AMBUB:DC), a company known for its transition from reusable to single-use endoscopes, with a favorable Buy rating and a price target set at DKK147.00. The move reflects confidence in the company’s growth prospects, with UBS projecting a compound annual growth rate (CAGR) of approximately 20% in revenue from 2025 to 2029 for Ambu’s single-use endoscope business as it ventures into newer medical indications.
The analysis by UBS indicates that Ambu’s remaining business segments, including Anaesthesia and Patient Monitoring, are expected to maintain stable growth. This is anticipated to contribute to an overall group revenue CAGR of 13%, which UBS notes would be the fastest in the medical technology sector. The firm also expects that operational leverage will lead to a 25% earnings per share (EPS) CAGR for Ambu.
Despite the current valuation of Ambu’s shares at around 40 times the estimated 2025 earnings per share, which is not considered inexpensive on a surface level, UBS points out that the stock is trading at half the average sector premium. Based on UBS’s forecasts, Ambu’s stock is expected to align with the sector’s average multiple by 2030, while still achieving revenue growth more than double that of the sector.
UBS’s endorsement of Ambu is based on the company’s pioneering role in the medical technology industry and its potential for sustained high growth. The firm’s analysis suggests that Ambu’s strategic focus on expanding its single-use endoscope offerings is well-positioned to capture significant market share in the coming years.
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